STOCKS of iron ore increased nearly one million tons at Kumba Iron Ore mines in the first six months of this year as state-owned rail and ports company Transnet continued to falter, said the Anglo American-owned company.
Announcing a decline in interim basic earnings of up to 29%, Kumba said Transnet’s rail performance was negatively affected by “several derailments and locomotive breakdowns”. At Saldanha port, “stacker-reclaimer reliability challenges” and bad weather contributed to a 5% year-on-year decrease in sales to 18.1 million tons (Mt).
Commenting on inventories, Kumba said finished stock “remained high” at 8.2Mt compared to 7.1Mt as of end-December with stock at the mines increasing to 7.4Mt compared to 6.5Mt. Stock at Saldanha Bay Port was unchanged compared to end-December at 600,000 tons with some 200,000 tons on a vessel loaded – but not sold.
Coupled with a lower average realised freight-on-board export iron ore price, Kumba said basic earnings would come in between R6.85bn and R7.35bn – a year-on-year decrease of between 24% and 29%.
In December, Kumba shelved plans to increase production saying that – following a business review – output would be flat from 2024 to 2026. This was to accommodate the drastic decline in performance of Transnet where railed ore had fallen 15% since 2019.
“In line with our business reconfiguration plan to align production to Transnet’s logistics performance, volumes were reduced by 2%, matching a 2% decrease in ore railed to port,” said Kumba CEO Mpumi Zikalala.
Production and sales guidance for the full year has been maintained at 35 to 37Mt and 36 to 38Mt,respectively, but the on-mine stock level increase will add pressure to this target. In a separate announcement, Anglo American said on-mine stocks were “above desired levels”.
